Last week, the Small Business Administration (SBA) released additional guidance for lenders regarding Paycheck Protection Program (PPP) loan forgiveness payments. For your convenience, attached is SBA’s Loan Forgiveness FAQ, as well as the most up-to-date document on general PPP FAQ’s.
According to SBA, loans will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll). Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels, and will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the 24-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
Please note that PPP borrowers should apply for forgiveness through the lender that issued the loan. Lenders will submit forgiveness applications to SBA through the lender portal, and SBA will make a final determination on how much forgiveness a borrower should receive. A lender has 60 days to review and submit the borrower’s application, and SBA then has up to 90 days to review the submission and issue a decision.
It’s our understanding submission procedures vary by lender. Some lenders are just beginning to accept applications, others have currently opened up applications to a handful of select borrowers based on when PPP funds were received, and some lenders are still working to get technology/personnel up to speed before they begin to accept applications.
Borrowers with questions specific to their loans should contact their lenders directly, but general information about the program can be found on SBA’s website.
Source: National Cattlemen’s Beef Association.